China to Compete With Boeing, Airbus in Passenger-Jet Game

You can add commercial aircraft to the list of industries likely to be reshaped by Chinese competition.

The Chinese government has officially approved the launch of China Commercial Aircrafts, which will manufacture large passenger planes. The plan is to have jets designed and built in China rolling off an assembly line by 2020.

The news has to be giving executives at Boeing and Airbus a bit of acid reflux. Asian airlines are expected to buy nearly 10,000 new planes by 2025, with more than 2,200 of those going to Chinese airlines. The emergence of a strong Chinese player could loosen Boeing’s and Airbus’ lock on the commercial-jet market.

Can they pull it off?

The people leading China’s push into the commercial-jet business aren’t dumb, and they’ve gained much of the technical and engineering know-how they need by cooperating with Boeing and Airbus. A consortium of Chinese companies known as China Aviation Industries Corporation (AVIC-I) produces components for Boeing’s 747 and 787 widebodies and operates a final assembly line for the Airbus A320.

And China’s big-jet game plan isn’t the country’s only recent foray into commercial aviation. Since 2002, China has been developing a 70-passenger regional jet called the ARJ21 and has received more than 100 orders from domestic airlines. If you needed proof that China plans to be a global player in the market, AVIC-I says it will set up a sales subsidiary for the ARJ21 in the
United States. The market for regional jets is currently dominated by Canada’s Bombardier and Brazil’s Embraer.

To be sure, China has some major obstacles to navigate. The established players have extensive networks providing airlines with parts and maintenance support — a network the Chinese will have to build from scratch. Safety is another issue. Chinese planes must meet the Department of Transportation‘s stringent safety criteria before they’ll be allowed to fly in the United States, and there is some question as to how long it will take China to meet these standards.

Perhaps harder for China to address is the issue of consumer perception. With U.S. manufacturing jobs flowing eastward and calls for protectionism growing louder, will U.S. consumers look favorably on a plane manufactured by a Chinese company, or will they see it as just another example of a U.S. industry being hollowed out at the hands of China?

Finally, recent high-profile recalls of Chinese products present a huge public-relations problem. If China is shipping poisoned pet food and toys to the United States, the thinking might go, why should they be trusted to produce an air-worthy airplane?

Sources: Time, International Herald Tribuine, Asia Times Online, Air Transport World